Volatility in context

After yesterday's selloff, many would not believe the S&P 500 is actually right where it began the week (as of the time of writing). Despite this fact, investors who tuned in to check prices throughout the week certainly did not enjoy the gyrations and whipsaws that took place. Surprisingly, the current 13% decline matches the average intra-year pullback that the S&P 500 has typically experienced dating back to 1980, so although the volatility is uncomfortable, its important to put into context.

Investors are trying to time the change in the inflation trajectory, Federal Reserve policy, China’s zero-COVID policy and the strength of the economy. But these changes tend to be slow developing and are nowhere near as reactive as the markets would have you believe. That is why we encourage investors not to watch and certainly not make investment decisions based on these daily headlines and sharp market moves and instead focus on more reliable and longer-term metrics.

Breaking Down Q1 US GDP

By definition, Gross Domestic Production only measures domestic production, so imports must be backed out of this calculation which was the primary detractor of GDP in the first quarter. Albeit not great to run such an import/export deficit, this metric is much less a sign of a slowing economy and much more a sign of a voracious US consumer demanding foreign goods. Yet, another reminder that context is key.

Legacy Trust Family Wealth Offices

 4200 Marsh Landing Blvd, Suite 100

Jacksonville Beach, FL 32250

Office: (904) 280-9100

Fax: (904) 280-9109

Legacy Trust Family Wealth Offices of Jacksonville Beach, Florida, is a new type of financial services firm - an independent multi-family office - that brings all facets of your personal financial affairs under one roof, where they are coordinated for optimum efficiency and maximum performance. 

Investment products are not FDIC insured, are not bank guaranteed, and may lose value.